REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  643        OF 2011 (Arising out of SLP(Crl.) No.3045 of 2008)

Milind Shripad Chandurkar            … Appellant

Versus

Kalim M. Khan & Anr.           …   Respondents

J U D G M E N T  

Dr. B.S. CHAUHAN, J.

1. Leave granted.

2. This  appeal  has  arisen  out  of  judgment  and  order  dated  

18.2.2008  passed  by  the  High  Court  of  Judicature  at  Bombay  in  

Criminal Revision No.656 of 2007 by which the High Court has set  

aside the judgments  and orders of the trial  Court as well  as of the

Appellate  Court  convicting  the  respondent  no.1  for  the  offences  

punishable under Section 138 of the Negotiable Instruments Act, 1881  

(hereinafter called the Act 1881) and sentencing him for the period,  

till  the  rising  of  the  Court  and  to  pay  compensation  of  a  sum of  

Rs.7,00,000/-.  Failing  which,  the  respondent  would  serve  simple  

imprisonment for a period of six months.

3. The facts and circumstances giving rise to this case are that the  

appellant/complainant claimed to be the sole proprietor of the Firm,  

namely,  Vijaya  Automobiles,  which  had the  business  of  supplying  

fuel.  The firm had supplied a huge quantity of diesel to respondent  

no.1 in the month of March 2005.  In order to meet the liability, the  

Respondent  no.1 made the payment  vide Cheque No.490592 dated  

28.4.2005  in  the  name  of  the  said  proprietary  Firm  drawn  on  

Development Credit Bank, Kurla Branch, Bombay for an amount of  

Rs.7,00,000/- (Rupees seven lakhs only).  The appellant/complainant  

deposited the said cheque in the account of the said Firm in Bank of  

India Uran Branch on 12.9.2005.

4. The  Development  Credit  Bank  returned  the  said  cheque  

mentioning  “unpaid” with  a  Memorandum “funds are  insufficient”.  

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The appellant/complainant sent notice dated 11.10.2005 by Registered  

A.D.  post  as  well  as  under  certificate  of  posting.   The  respondent  

no.1/accused did not accept the notice sent by Registered A.D. post.  

However, the notice sent by certificate of posting stood served upon  

him as the respondent  no.1 admitted the  said fact  in  his  statement  

under  Section  313  of  the  Code  of  Criminal  Procedure,  1973  

(hereinafter  called  Cr.P.C.).   The  respondent  no.1/accused  neither  

replied to the notice,  nor made the payment within 15 days of the  

receipt of the notice.

5. The  appellant/complainant  filed  a  complaint  case  no.545  of  

2005 before the Judicial Magistrate, First Class, Uran under section  

138 of the Act 1881 on 22.11.2005.  The case was tried, however, the  

respondent  no.1/accused  did  not  enter  the  witness  box  and  after  

considering the case, the trial Court vide judgment and order dated  

22.12.2006  concluded  the  trial  convicting  the  respondent  no.1  to  

suffer  simple  imprisonment  till  rising  of  the  court  and  to  pay  

compensation of Rs.7,10,000/- and in default of payment thereof, to  

suffer simple imprisonment for six months.  It was directed that out of  

the  aforesaid  amount  of  compensation,  a  sum  of  Rs.10,000/-  be  

credited to Raigad District Legal Aid Committee.

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6. Being  aggrieved  of  the  aforesaid  judgment  and  order,  the  

respondent no.1/accused filed Criminal Appeal No.85 of 2006.  The  

learned Sessions Judge vide judgment and order dated 18-19/9/2007  

dismissed the  said appeal,  with the  amount of  compensation  being  

reduced from Rs.7,10,000/- to Rs.7,00,000/-.  Thus, the direction to  

credit  the  amount  of  Rs.10,000/-  to  Raigad  District  Legal  Aid  

Committee was set aside.  

7. Being aggrieved, respondent no.1 preferred Criminal Revision  

Application No.656 of 2007 before the High Court which has been  

allowed vide judgment and order dated 18.2.2008 (impugned) only on  

the  ground  that  the  appellant  could  not  produce  any  evidence  to  

establish that he was the sole proprietor of the proprietary concern in  

question.  Hence, this appeal.

8. We have heard Shri Shekhar Naphade, learned senior counsel  

for the appellant, Shri Viraj Kadam, learned counsel for respondent  

no.1 and Shri Shankar Chillarge,  Additional Advocate General  for  

respondent no.2 and perused the record.   

All the three courts below have dealt with the issues elaborately  

and recorded the following findings of fact:-   

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(i) The cheque had been issued by the respondent no.1 in favour of  

the Firm concerned towards discharge of pre-existing liability  

and not as security.

(ii) The  substantive  sentence  of  imprisonment  in  default  of  

payment could be imposed.

So far as the findings on the aforesaid two issues are concerned,  

the  same  are  not  under  challenge  before  us.   Learned  counsel  

appearing for the respondents have accepted the aforesaid findings.   

9. The only issue involved herein is as to whether the appellant  

owns the said firm i.e., whether he is the proprietor of the said firm?  

The trial Court as well as the Appellate Court have held that a sole  

proprietary  concern  is  no  independent  legal  entity  and  its  identity  

remains inseparable from its proprietor.  But it merely remains a legal  

proposition. None of the said courts held that the appellant was the  

sole proprietor of the said firm.  

10. The High Court has set aside the judgments of the trial Court as  

well as the Appellate Court in Revision only on the ground that as the  

appellant  did  not  produce  any  evidence  to  show  that  he  was  the  

proprietor of the Firm, he had no locus standi to file the complaint.

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11. The trial Court held that the complainant had  deposed  that he  

was proprietor of the Firm, namely, “Vijaya Automobiles” which had  

the business of supplying fuel etc. and the Firm had supplied the fuel  

on credit to respondent no.1/accused.  The Court also took note of the  

pleadings taken by the respondent no.1/accused that he had given the  

cheque  to  the  appellant  for  Vijaya  Automobiles  but  it  was  as  a  

security and not to meet any legal liability.  Therefore, the respondent  

no.1/accused had admitted that the appellant had actual control over  

the said firm.  The respondent no.1/accused  admitted his signature on  

the cheque and execution of the cheque.  Therefore, the presumptions  

under sections 118 and 139 of the Act 1881 were attracted.  

12. Dealing with the issue involved herein, the Appellate Court has  

noted  that  perusal  of  the  cross-examination  indicated  that  the  

appellant did not produce any documentary evidence to show that he  

was the proprietor of Vijaya Automobiles.  Rather it was admitted by  

the  appellant  in  the  cross-examination  that  he  did  not  have  any  

documentary evidence to show that the complainant was the owner of  

the petrol pump.   

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13. In spite of making the aforesaid observations, the appeal was  

dismissed on the ground that admittedly diesel had been supplied to  

the respondent no.1/accused, and the said respondent had issued the  

cheque to meet the liability, which could not be encashed for want of  

funds.  All other requirements in law, i.e., issuance of notice etc. also  

stood completed.

14. Relevant part of the affidavit filed by the appellant/complainant  

before the trial Court reads as under:

“I, Shri Milind Shripad Chandurkar, Aged about   37  years,  Indian  Inhabitant,  Occ.  Business,   Proprietor  of  M/s.  Vijay  Automobiles,  having  address at Sector-29, Dronagiri Node, Uran, Dist.   Raigad, take oath and state on solemn affirmation  as under…..

I state that in due discharge of legal liability of the   accused   as  mentioned  in  foregoing  paras,  the   accused issued one cheque dtd. 28.4.2005 in my  name i.e.  in the Name M/s.  Vijaya Automobilies   which  was  drawn on Development  Credit  Bank,   Kurla  Branch,  Mumbai-70  bearing  Cheque  No.490592, for Rs.7,00,000/- (Rupees Seven Lakhs   only).”

Relevant part of his cross-examination reads as under:-

“It is true that till today I had not produced any   documentary evidence to show that I am owner of   Vijaya  Automobiles……Till  today  I  had  not   produced any documentary evidence to support.”  

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15. The complainant had also examined Shri S.K. Sharma, owner  

of  M/s.  Vikas  Travels  under  whom the  respondent  no.1  had  been  

working  as  a  sub-contractor.   In  his  cross-examination,  Shri  S.K.  

Sharma also stated as under:-

“I  have  no  documentary  evidence  to  show  that   complainant Milind Shripad Chandurkar owns the   petrol pump.”

16. Thus,  from  the  above,  it  is  evident  that  the  

appellant/complainant could not produce any document to show that  

he was the proprietor of Vijaya Automobiles in spite of the fact that  

the issue had been agitated by the respondent no.1/accused at every  

stage.  It is also evident from the documents on record that in the list  

of witnesses the complainant had mentioned the name of his banker as  

a witness, however, the said banker was not examined.

17. It may also be pertinent to mention here that appellant did not  

make any attempt to adduce additional evidence at the appellate stage  

also.  No document has ever been filed to substantiate his averment in  

this regard.

18. Section  7 of the Act 1881 defines “Payee” as the person named  

in the instrument, to whom or to whose order the money is by the  

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instrument directed to be paid. Section 8 defines “the holder of the  

cheque”  as  any person entitled  in  his  own name to  the  possession  

thereof and to receive or recover the amount due thereon from the  

parties thereto. Section 9 defines “holder in due course” as any person  

who for consideration became the possessor of a cheque if payable to  

a bearer or the payee or endorsee thereof.   

           Section 138 provides for penalties in case of dishonour of  

certain cheques for insufficiency of funds in the accounts. However,  

exception contained in clause (c) thereof reads as under:  

“The  drawer  of  such  cheque  fails  to  make  the  payment of the said amount of money to the payee  or, as the case may be, to the holder in due course  of the cheque, within fifteen days of the receipt of   the said notice.”                          (Emphasis added)

19. Section  142  provides  for  taking  cognizance  of  the  offence  

notwithstanding anything contained in Cr.P.C. which reads as under:  

“(a) no court shall take cognizance of any offence  punishable  under  Section  138  except  upon  a   complaint, in writing, made by the payee or, as the   case  may  be,  the  holder  in  due  course of  the  cheque.”                                      (Emphasis added)

20. This Court in  Shankar Finance and Investments v. State of  

Andhra Pradesh & Ors.,  (2008) 8 SCC 536, dealt with the issue  

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involved  herein  elaborately  and  held  that  where  the  “payee”  is  a  

proprietary concern the complaint can be filed (i) by the proprietor of  

the proprietary concern describing himself as the sole proprietor of the  

“payee”;  (ii)  the  proprietary  concern  describing  itself  as  the  sole  

proprietary  concern  represented  by  its  proprietor;  and  (iii)  the  

proprietor  or  the  proprietary  concern  represented  by  the  Attorney  

Holder under the power of attorney executed by the sole proprietor.  

However, it shall not be permissible for an Attorney Holder to file the  

complaint  in  his  own name as  if  he was  the  complainant.  He can  

initiate criminal proceedings on behalf of the principal.   

In a case of this nature, where the “payee” is a company or a  

sole proprietary concern, such issue cannot be adjudicated upon taking  

any guidance from Section 142 of the Act 1881 but the case shall be  

governed by the general law i.e.  the Companies Act 1956 or by civil  

law where an individual carries on business in the name or style other  

than his own name. In such a situation, he can sue in his own name  

and not in trading name,  though others can sue him in the trading  

name.   So  far  as  Section  142  is  concerned,  a  complaint  shall  be  

maintainable in the name of the “payee”, proprietary concern itself or  

in the name of the proprietor of the said concern.  

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         The Court placing reliance  on earlier judgments, particularly,  

in Janki Vashdeo Bhojwani v. Indusind Bank Ltd., (2005) 2 SCC  

217,   held that the general principles of company law or civil law  

would apply for maintaining the complaint under Section 138 of the  

Act 1881.  

21. In National small Industries Corporation Ltd. v. State (NCT  

of Delhi) & Ors., (2009) 1 SCC 407, this Court held as under:  

“The term “complainant” is not defined under the   Code.  Section  142  of  the  NI  Act  requires  a   complaint  under  Section  138  of  that  Act  to  be  made  by  the  payee  (or  by  the  holder  in  due  course)…”

22.  Thus,  in view of the above, the law stands crystallised to the  

effect that a person can maintain a complaint provided he is either a  

“payee” or “holder in due course” of the cheque.  

23.     In the instant case, it is evident that the firm, namely, Vijaya  

Automobiles, has been the payee and that the appellant cannot claim  

to be the payee of the cheque, nor can he be the holder in due course,  

unless he establishes that the cheques had been issued to him or in his  

favour or that he is the sole proprietor of the concern and being so, he  

could also be payee himself and thus, entitled to make the complaint.  

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The appellant miserably failed to prove any nexus or connection by  

adducing  any evidence,  whatsoever,  worth  the  name with  the  said  

firm, namely, Vijaya Automobiles.  Mere statement in the affidavit in  

this  regard,  is  not  sufficient  to  meet  the  requirement  of  law.   The  

appellant  failed  to  produce  any  documentary  evidence  to  connect  

himself with the said firm. It is evident that the firm had a substantial  

amount of business as in one month it sold the diesel to respondent no.  

1 – a single party, for a sum of Rs. 7 lakhs.  The appellant would, in  

addition,  have  also  been carrying  out  business  with  other  persons.  

Thus, a person with such a big business must have had transactions  

with the bank and must have been a payee of income tax, sales tax etc.  

Thus, in such a fact-situation, there would be no dearth of material  

which could have been produced by the appellant to show that he was  

the sole proprietor of the said firm.  The appellant failed to adduce any  

evidence  in  this  regard,  nor  made  any  attempt  to  adduce  any  

additional evidence at the appellate stage, in spite of the fact that the  

respondent is raising this issue from the initiation of the proceedings.

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24.     In view of the above,  we do not  see any cogent reason to  

interfere with the impugned judgment and order of the High Court.  

The appeal is devoid of any merit and, accordingly, dismissed.  

                          ……… ……………………..J. (P. SATHASIVAM)                                          

                             ……………………………..J. (Dr. B.S. CHAUHAN)

New Delhi, March 3, 2011  

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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

Special Leave Petition (Criminal) No.3122 of 2008

Milind Shripad Chandurkar            … Appellant

Versus

Naimulla M. Khan & Anr.                                        …   Respondents

WITH

Special Leave Petition (Criminal) No.3124 of 2008

J U D G M E N T  

Dr. B.S. CHAUHAN, J.

1.  In view of the judgment in Criminal Appeal No. 643 of  2011  

arising out of Special Leave Petition (Criminal) No. 3045 of 2008, the  

above Special Leave Petitions are dismissed.  

                          ……… ……………………..J. (P. SATHASIVAM)                                  

     ……………………………..J. (Dr. B.S. CHAUHAN)

New Delhi, March 3, 2011  

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